S&P rates SBB bonds BB

S&P said it assigned a BB rating to Samhallsbyggnadsbolaget i Norden AB’s, or SBB, proposed unsecured subordinated hybrid notes of benchmark size. The size of the offering will be subject to market conditions.

SBB plans to use the proceeds to fund part of the acquisition of Hemfosa and repay debt, which, combined with S&P’s assumption of material asset disposals in the coming months, will support continued deleveraging.

The issue rating on the proposed notes is two notches below the BBB- long-term issuer credit rating on SBB, reflecting the agency’s view of the notes’ subordination and interest deferability.

“We believe that the notes will meet our criteria for intermediate equity content and, in our calculation of SBB’s credit ratios, we will treat 50% of the principal outstanding as debt rather than equity. We will also treat 50% of the related payments on these notes as equivalent to interest expense. Both treatments are in line with our hybrid capital criteria,” S&P said in a press release.

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